Strengthening Medicare for Current and Future Generations

Interim Meeting of the AMA House of Delegates
Report 5 of the Council on Medical Service, (Reference Committee J) AMA, November 2012

The Council recommends that the AMA support transitioning Medicare to a defined contribution program that would enable beneficiaries to purchase coverage of their choice through a Medicare exchange of competing health insurance plans. Traditional Medicare would be an option in the Medicare exchange.

In addition to supporting transitioning Medicare to a defined contribution program, the AMA should continue to strongly advocate for related Medicare reforms. Policies related to balance billing, private contracting, and the repeal of the Medicare Independent Payment Advisory Board remain particularly relevant and should be reaffirmed. Similarly, the AMA should continue to support incentives to encourage people to contribute to health savings accounts, and to promote their use as a means to ensure access to high quality medical care. It is also critical that the AMA continue to advocate for the other Medicare reforms articulated in Policy H-330.896, particularly restructuring beneficiary cost-sharing in order to provide incentives for appropriate utilization while discouraging unnecessary or inappropriate care, and increasing the Medicare eligibility age to reflect increases in the average life expectancy in the United States.


Newsmakers:Ardis Hoven, President-Elect, American Medical Association

The Medicare NewsGroup, November 27, 2012

For Dr. Ardis Hoven and other veteran policymakers within the American Medical Association (AMA), the nation’s largest medical organization’s move to support transitioning Medicare away from a defined-benefit to a defined-contribution system has been a long time coming.

“(The) AMA has been working on Medicare policy to improve the program about 25 years, on an off,” said Hoven, who was first elected to the AMA board of trustees in 2005, following many years as a member and chair of the AMA Council on Medical Service. That council was where AMA’s policy to move to a defined contribution began.

As Congress and the White House look in the coming weeks for new ideas to reduce the deficit and avoid the so-called fiscal cliff, Hoven sees promise. She believes the AMA’s newly approved set of policy principles for a Medicare defined contribution will receive serious consideration in Washington.…

In recent years it appeared that the AMA had an epiphany and began to transition from an organization that defended the interests of physicians to an organization advocating for the interests of patients. They supported the Affordable Care Act as an improvement over the status quo, and they even elected as their president, Jeremy Lazarus, a very fine gentleman noted for patient advocacy, especially as a spokesman on behalf of the uninsured.

Judging from the interim meeting this month of the AMA House of Delegates, the epiphany fizzled. Ardis Hoven, the AMA President-elect, and her co-conspirators from the Council of Medical Services succeeded in advancing AMA’s official support of the conversion of Medicare from a defined benefit to a defined contribution. This gradually transfers risk from the taxpayers who fund Medicare to the pockets Medicare beneficiaries themselves. Many Medicare patients already face financial hardship, and this will only make their problems worse.

Why would the AMA do this? As a Life Member of AMA, I can present my own subjective observations. During my medical career, membership in the AMA dramatically declined. Those leaving did not find the AMA to be particularly relevant, whereas those remaining tended to be politically conservative, wishing to advance policies that would conform with their conservative ideology. But it wasn’t just political ideology that drove the AMA. Some physicians with more progressive views also remained, hoping to improve AMA policies from within, but they remained in the minority.

I hate to say it, but there does seem to be a more nefarious agenda than that dictated by their political ideology. This may sound like an oversimplification, but I don’t think it is: they want patients to pay their full fees in cash. They do not want an intermediary to control fees or to establish any other rules on how their services are to be reimbursed.

Just look at the report they approved this month (excerpt above). Defined contribution shifts more of the responsibility for health care spending to the patients’ pockets. Balance billing allows physicians to collect directly from the patient the balance of their full fees regardless of what any intermediary authorizes. Private contracting allows the physician to contract directly with the patient for full fees, again with no third party intervention. Health savings accounts are cash accounts which the physicians can tap directly. “Restructuring beneficiary cost-sharing in order to provide incentives for appropriate utilization” is code language for requiring patients to pay more in cash for any care they receive. Increasing Medicare eligibility age is a scheme to postpone the day that their patients become eligible for a public program that limits cash payments from patients. And there is much to be said about the Medicare Independent Payment Advisory Board (IPAB), good and bad, but the AMA fears this most of all since it would place control of their fees in the hands of an independent government board. (Much more needs to be said about IPAB, but not here.)

We saw what happened at the start of the Medicare program. Physicians were able to set their own fees, and fees skyrocketed. As much as the AMA House of Delegates wants physicians to have full control of fees, we can’t allow it. We also don’t want to leave that control in the hands of private insurers that have pressing interests which have priority over patients. No, we need to place control in the hands of our own public administrators who will always place patients first, understanding that a quality health care system also requires adequate funding.

Ardis Hoven says that she believes “the AMA’s newly approved set of policy principles for a Medicare defined contribution will receive serious consideration in Washington.” Do PNHP members have something to say about this? It’s time for op-eds, letters to the editor, community forums, and direct communication with your elected representatives. The topic is hot in D.C. Do it now.